It came up in a conversation the other day about paying off bad credit car loans early, and how much it really saves the client. I like to use the phrase “What didn’t make sense 2 years ago may still not make sense 2 years from now, but it might make sense today”. What this means is 2 years ago a client might not have been in the position to accept a bad credit car loan, and 2 years from now the same, but today, due to whatever circumstances, the bad credit car loan might make sense. See, credit is all about growth. I always try to let my clients know to pay their loan off early. Their is definitely good reason for this. A person that is involved in a 60 month bad credit car loan or an Everyone approved car loans with a higher rate can save thousands of dollars by paying just $100 a month extra. Here’s an example: If you were too take out a $10,000 car loan today at 29.5% interest for 60 months, and decided to pay $100 a month extra towards this loan you would save $14000 in interest. That’s a huge savings. Not only do you save the $14000 but you help rebuild your credit towards getting a low rate car loan . The $100 towards your bad credit car loan every month essentially turns into a 16% car loan after all the payments are made. The actual interest does not come down but the total cost of borrowing does. I used the $10000 example because it is easy to calculate based on that number. So when you are faced with a Canada bad credit car loan or a bad credit car loan in Canada think about paying a little extra towards the loan every month.
Just my 2 Cents